July 23, DNV Business Assurance. All rights reserved.

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3 Speakers Matthew Shindell Todd Kramer Sidney Vianna Matthew R. Shindell is Special Counsel in the law firm of Goldberg Segalla in Philadelphia, where he concentrates his practice in the defense of product liability matters involving industrial equipment and consumer products. He is a Fellow of the American Board of Trial Advocates and a member of the Counterfeit Avoidance Mark Alliance (CAMA).. Todd Kramer is the CEO of Secure Components LLC, which is located outside of Philadelphia, Pennsylvania. Todd is an industry veteran with vast experience working within the Department of Defense & Aerospace supply chain. He has become an expert in counterfeit avoidance by participating in various international groups and committees, including the United States National Committee/International Electrotechnical Commission(USNC/IECQ), serving as Chairman of USNC/IECQ Distributors Advisory Group and his work with the SAE G-19C committee. Sidney Vianna is the Director of Aviation, Space & Defense Services for DNV Business Assurance, a leading global Conformity Assessment Body. He is a member of the Leadership Team of the Americas Aerospace Quality Group and also involved with the AS9100 Revision D Rewrite effort and a long-standing and senior member of ASQ. 3

4 Agenda Counterfeit in the Aviation, Space & Defense Sectors Matt Shindell Anti-Counterfeit Standards and Conformity Assessment Programs Todd Kramer The AS6081 Certification Journey of Secure Components - Todd Kramer Anti-Counterfeit Auditing, the View From a CB - Sidney Vianna Counterfeit Avoidance Mark Alliance Todd Kramer Q&A 4

5 Agenda Counterfeit in the Aviation, Space & Defense Sectors Matt Shindell Anti-Counterfeit Standards and Conformity Assessment Programs Todd Kramer The AS6081 Certification Journey of Secure Components - Todd Kramer Anti-counterfeit auditing, the view from a CB - Sidney Vianna Counterfeit Avoidance Mark Alliance Todd Kramer Q&A 5

6 Counterfeit Parts in the Aviation, Space & Defense Sectors November 8, 2011 United States Committee on Armed Services hearing regarding counterfeit electronic parts in the defense supply chain Counterfeiting is not limited to the defense supply chain

7 Section 818 of the National Defense Authorization Act for Fiscal Year 2012 Signed into law by President Obama to fight product piracy on December 31, 2011 Purpose to establish inspection, testing, detection, reporting, and authentication requirements of electronic parts for Department of Defense (DOD) contractors

8 Potential Penalties under Section 818 Penalties are severe and could be crippling! Whoever traffics goods knowing they are counterfeit goods that will malfunction or will likely cause serious injury or death to a member of the Armed Forces may be fined up to $5 million and imprisoned up to 20 years. Whoever knowingly or recklessly causes or attempts to cause serious bodily injury from the distribution of counterfeit parts may be fined up to $15 million and imprisoned up to 30 years. All segments of the supply chain are subject to penalties, not just the counterfeiters themselves.

9 AS6081 AS6081 recently adopted by the DOD According to the Defense Standardization Office adoption of the standard is analogous to Good Housekeeping Seal of Approval. It is a big deal to have the endorsement of the Department of Defense Provides uniform requirements, practices, and methods to mitigate the risks of purchasing and supplying fraudulent or counterfeit parts

10 AS5553A Similar standards to AS6081 Pertains to manufacturers Manufacturers should look for AS6081 distributors for purchases outside authorized channels. (Authorized Distributors/Franchise Distributors have contractual agreements with the Original Component Manufacturer (OCM)

11 Strict Liability Anyone in the supply chain can be sued under this theory A manufacturer and/or supplier will be held liable if it is determined that a product is defective and this defect resulted in personal injuries A manufacturer or supplier under this theory can be held strictly liable even if reasonable care was exercised to ensure the product is safe The rationale is that the risk of loss for injury resulting from defective products should be borne by the suppliers because they are in a position to absorb the loss by distributing it as a cost of doing business

12 Agenda Counterfeit in the Aviation, Space & Defense Sectors Matt Shindell Anti-Counterfeit Standards and Conformity Assessment Programs Todd Kramer The AS6081 Certification Journey of Secure Components - Todd Kramer Anti-Counterfeit Auditing, the View From a CB - Sidney Vianna Counterfeit Avoidance Mark Alliance Todd Kramer Q&A 12

13 International Standards Are Now Available SAE AS 5553A - Counterfeit Electronic Parts; Avoidance, Detection, Mitigation, and Disposition SAE AS Counterfeit Electronic Parts for Distributors SAE AS Counterfeit Materiel; Assuring Acquisition of Authentic and Conforming Materiel

14 Counterfeit Electronic Parts; Avoidance, Detection, Mitigation Eradicating the Counterfeit Electronic Parts Epidemic requires! - International Supply Chain Certification System - Technical standard(s) recognized worldwide - Competency based training program - International Accreditation of Certification Bodies - International certification program Centralized Database of Certificates 450df8f2ffc1257b9f002d56a9?OpenDocument

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16 Aerospace Counterfeit Document Structure Aerospace Standards Compliance Verification Operating Documents Accreditation Documents Certification Body Documents SAE AS5553 Aerospace & Avionics Counterfeit Standard IECQ 03-7 Counterfeit Program Rules of Procedure ANAB Counterfeit Accreditation Requirements Certification Body Counterfeit Operating Procedures SAE AS6462 Compliance Criteria IECQ OD & Counterfeit Program Implementation Principles ANAB Counterfeit Surveillance Requirements SAE AS6081 Aerospace & Avionics Distributor Standard IECQ OD 707 Counterfeit Program SME Qualification Requirements ANAB Counterfeit Witness Assessment Requirements SAE AS6301 Compliance Criteria IECQ OD 708 Counterfeit Program Witness Assessment Criteria & Report Requirements IECQ On-line Certificate of Compliance Verification

17 The Chain of Custody What does Component Chain of Custody mean? Demonstrable Authenticity From the components qualified creator Each change of ownership is documented Component quality & integrity assured at all times ESD protection is carefully managed

18 International Supply Chain Certification System First-Tier Supplier Second-Tier Supplier Third-Tier Supplier Fourth-Tier Supplier Fifth-Tier Supplier OEM Company Company A Subcontracted Supplier A Company Rubber Kneading A Company Trading A Company A Company A Company A Company A Company Injection Molding A Company A Company A Company A Company Shaft Cutting Subcontracted Supplier A Company Plating Rubber Material additive Trading Trading ABS resin Steel Wire Rod Steel Bar Steel Materials Note: Encircled Words indicate the name of the process or purchased goods Procurement Route Examination The Each level must know that their supplier is compliant

19 Anti-Counterfeit Certification with National & International Recognition National & International Standards SAE AS5553 & AS Assessment Criteria AS6081& AS Assessment Criteria US Accreditation Body + International Conformity Assessment System 3 rd Party International Accredited Certification Body =

20 Agenda Counterfeit in the Aviation, Space & Defense Sectors Matt Shindell Anti-Counterfeit Standards and Conformity Assessment Programs -Todd Kramer The AS6081 Certification Journey of Secure Components Todd Kramer Anti-Counterfeit Auditing, the View From a CB - Sidney Vianna Counterfeit Avoidance Mark Alliance Todd Kramer Q&A 20

21 Todd Kramer, CEO of Secure Components AS9120 ISO AS6081 QTSL Certified 21

22 Buying Cheap Selling High What is wrong with this??? Housing bubble sub-prime mortgages Trading Places Components too good to be true 22

23 Secure Components Has A Different Mission We Had To Do Better From lessons learned on buying cheap and selling high We educated ourselves on the problems associated with e-waste We recognized the risks and dangers for the men and women in our military that we were providing parts to. 23

24 Recognition for the DoD to Implement Radical Changes NDAA section 818 Pres. Barack Obama Senate Arms Committee: Senators McCain and Levin Legal Ramifications 24

25 Actions Taken We Joined: United States National Committee (USNC) International Electro-technical Committee Quality (IECQ) IECQ - Distributors Advisory Group (DAG) SAE G19C Develop of AS6301 Auditing Criteria Counterfeit Avoidance Mark Alliance (CAMA) 25

26 Hurdles and Commitments to Implement AS6081 Procedures and a Counterfeit Avoidance Plan Pain and Suffering Financial Resources (man hours) Energy Many late nights Will Investing now for tomorrow Hand to hand combat over terms and phrases with industry 6 ½ days of assessor time QMS and CAP by one CB 26

27 AS6081 Flow Down Chart 27

28 Successful Results AS6081 and AS9120 Improvement to business and quality systems Industry leadership roles representing US distributors and brokers at the International level Learned how to buy from foreign entities effectively Participated in founding Not For Profit CAMA Organization 28

29 Agenda Counterfeit in the Aviation, Space & Defense Sectors Matt Shindell Anti-Counterfeit Standards and Conformity Assessment Programs -Todd Kramer The AS6081 Certification Journey of Secure Components - Todd Kramer Anti-Counterfeit Auditing, the View From a CB - Sidney Vianna Counterfeit Avoidance Mark Alliance Todd Kramer Q&A 29

30 Anti-counterfeit auditing, the view from a CB Counterfeit products undermine the safety and reliability of critical products in both commercial and military applications. Interested parties are claiming for mechanisms that assist in the enhancement of assurance and confidence of counterfeit-free supply chains. Industry standards, such as the SAE AS6081, AS5553 and AS6174 will assist stakeholders in mitigating counterfeit parts, as long as the conformity assessment process is robust and recognized. To that effect, we are working to ensure that any attestation of conformity against the standards provides for confidence and assurance 30

31 Anti-counterfeit auditing, the view from a CB The IECQ has developed an accreditation process for AS6081 and AS5553 ANAB is developing accreditation programs for both of the standards The SAE G19 is developing the standards we have been talking about, but many other stakeholders are increasingly involved IAQG SCMH being developed Combined certification 31

32 Agenda Counterfeit in the Aviation, Space & Defense Sectors Matt Shindell Anti-Counterfeit Standards and Conformity Assessment Programs -Todd Kramer The AS6081 Certification Journey of Secure Components - Todd Kramer Anti-Counterfeit Auditing, the View From a CB - Sidney Vianna Counterfeit Avoidance Mark Alliance Todd Kramer Q&A 32

33 Counterfeit Avoidance Mark Alliance (CAMA ) is a membership-based international organization bringing together business leaders, producers, regulators, standards development and conformity assessment organizations to address and mitigate the counterfeit epidemic worldwide. CAMA members and associates are authorized to display the CAMA alliance trust mark on their website and marketing material. Networking and access to the following offerings and organizations: Independent and Franchised Distributors and Brokers covering a broad range of products/services; Design, manufacture, services, repair and test companies working in the component, material subassembly and finished goods industries; Standards Development organizations; Conformity Assessment and Laboratory Accreditation Organizations such as ilac, IAF, IEC, ISO; Hazardous Substance Free Mark Alliance (HSF Mark); Accredited Conformity Assessment and Laboratory Testing Organizations; Training and Consulting Organizations; Small Business Development Centers. 33

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35 Agenda Counterfeit in the Aviation, Space & Defense Sectors Matt Shindell Anti-Counterfeit Standards and Conformity Assessment Programs -Todd Kramer The AS6081 Certification Journey of Secure Components - Todd Kramer Anti-Counterfeit Auditing, the View From a CB - Sidney Vianna Counterfeit Avoidance Mark Alliance Todd Kramer Q&A 35

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